U.S. Senate Committee on Banking, Housing and Urban Affairs lawmakers challenge FHFA Director Pulte on including unconverted cryptocurrency in mortgage underwriting

Senior Democrats on the U.S. Senate Committee on Banking, Housing and Urban Affairs led by Senator Jeff Merkley and Ranking Member Elizabeth Warren sent a letter to Federal Housing Finance Agency (FHFA) Director William Pulte questioning his order directing Fannie Mae and Freddie Mac to submit proposals that would let mortgage lenders consider unconverted cryptocurrency assets in the underwriting process. The lawmakers argue the move could add consumer risk and raise safety and soundness concerns for the U.S. housing and financial markets. The letter notes that current policy for the Enterprises and other federally backed, insured, or guaranteed mortgage channels does not permit cryptocurrency to be counted toward underwriting unless it has been converted to U.S. dollars and appropriately documented. It flags volatility and liquidity risks that could impair a borrower’s ability to convert crypto to cash to buffer against default, and highlights risks of loss from scams, cyber hacks, or physical theft. The senators also fault the directive for not explaining how proposals will be developed, how FHFA will assess risks and benefits, or how stakeholder feedback will be gathered, and raise potential conflicts of interest given Pulte’s role as chair of both Enterprises’ boards and his influence over board approval of any proposals.